US Stock Market Overview – Stocks Rebound Led by Nasdaq; Tesla Continues to Surge

US stocks surged higher rebounding from the sharp declines experienced on Friday. The Nasdaq was the best performing of the major indices led by a strong rebound in Alphabet and Netflix. Tesla continued to rip higher rising by nearly 18%. Telsa has more than tripled since October of 2019. Most sectors in the S&P 500 index were higher on Monday, led by Materials and Technology. The energy was the worst-performing sector as declines in oil prices continued to generate headwinds for energy shares. US Manufacturing rebounded in January rising to the highest levels since July 2019. Construction spending disappointed. Gold prices eased after attempting to break out on Friday. Oil prices dropped more than 2% as fears of the coronavirus continue to weigh on the energy sector.

Manufacturing Rebounded

The ISM reported that US national factory activity increased to a reading of 50.9 last month, the highest level since July, from an upwardly revised 47.8 in December. This represents expansion. Expectations were for the index to rise to 48.5 in January from the previously reported 47.2 in December. The new orders sub-index jumped to 52.0 last month, the highest since May, from a revised 47.6 in December. The ISM’s factory employment index rose to 46.6 last month from a revised reading of 45.2 in December, suggesting manufacturing payrolls could remain weak.

Construction Spending Slips

The Commerce Department reported that US construction spending declined by 0.9%. For the year, construction spending fell 0.3%, the first setback since a 2.6% decrease in 2011. The home building sector rose a solid 1.4%. This category continues to benefit from falling mortgage rates.

The Coronavirus Remains in the Headlines

The coronavirus continues to spread across China and this is likely to weigh on global growth. Eventually, this virus will make its way around the globe, and the question for investors is how much this will eat into global economic growth. Volatility has perked up slightly but a substantial decline in growth has not been priced into US equity markets.